Hong Kong to impose new property taxes

A 15% tax on overseas buyers will be imposed.

Hong Kong will introduce new measures to curb an overheating property market, including a new 15% tax on overseas buyers. Financial Secretary John Tsang said the measures seek to check the rise in prices to increasingly unaffordable levels.

The government will also raise the stamp duty on short-term property transactions to limit speculation. This buyer's stamp duty of 15% will be imposed on non-Hong Kong permanent resident buyers and companies.

A special stamp duty will also be imposed on buyers seeking to sell within three years. The stamp duty will be increased to 20% for those selling within six months, to 15% within a year and 10% from 12-36 months.

This is the first time the government has taken such direct measures to curb what many see as excessive overseas buying, particularly from mainland Chinese buyers that has taken prices beyond record 1997 levels.

Tsang noted these were extraordinary measures at an exceptional time. He said the market was going against the economic fundamentals of Hong Kong, and was being fuelled by low interest rates, easy credit and a tsunami of mainland Chinese buyers.

Previous initiatives by the government have failed to halt the rise in property values. Analysts said expectations had prevailed that the market would likely continue to rise given a flood of hot money from the United States' as a result of latest round of quantitative easing, low interest rates and plentiful demand from mainland Chinese.

The Hong Kong Monetary Authority last month ordered banks to curb home loans to borrowers with more than one mortgage to prevent the city being flooded with hot money after the United States announced an open ended new stimulus plan to spur growth.